July 26, 2017

The victories keep on rolling for IJ’s school choice litigation! In May, IJ scored a big win for Montana families when a district court ruled that the Montana Department of Revenue made a “mistake of law” when it tried to exclude students attending religious schools from the state’s school choice program. The program is now back to doing what the Montana Legislature intended: allowing all low-income families to apply for scholarships to attend the private schools of their choice—religious or secular.

This case provided IJ with a unique opportunity to go on the offensive to protect school choice. Usually IJ steps in to defend programs after a program has been challenged in court—in other words, we are not the ones filing the lawsuits. But the Montana Department of Revenue left us no choice when it refused to administer the program correctly.

Montana passed its first-ever school choice program in May 2015. It is a modest tax credit for donations to scholarship-granting organizations. The program allowed all private schools to participate by accepting scholarship students, but the Department of Revenue decided to exclude all religious schools from participating. It based this rule on the Montana Constitution’s Blaine Amendment. The provision, like all Blaine Amendments, prohibits the state from aiding religious schools but says nothing about aiding parents.

The program is now back to doing what the Montana Legislature intended: allowing all low-income families to apply for scholarships to attend the private school of their choice—religious or secular.

In Montana, religious schools constitute a significant majority of private schools, and if the Department were allowed to exclude them, the tax credit program would have failed. This is why we viewed it as important to overturn the rule. The whole point of school choice programs is to give parents the broadest array of options possible to meet their children’s educational needs, and to let parents decide what education is best for their children.

So IJ filed suit against the Department of Revenue on behalf of three parents in December 2016. In an unusual development in an unusual case, the Montana Attorney General’s Office declined to represent the Department, which has had to rely on its own attorneys.

This case represents the first time that a state department of revenue has relied on a Blaine Amendment to distort implementation of a tax-credit scholarship program. Previously, outside parties have challenged the constitutionality of similar rules, and IJ has represented parents as intervening defendants alongside state departments of revenue. The Department’s unprecedented action has meant that we represent the parents as plaintiffs—and we used that status to get the rule temporarily suspended and to win our district court victory, which included an order granting a permanent injunction of the rule.

Our first line of argument for challenges to tax credit programs is that tax credits do not constitute “appropriations” or payments of state funds subject to the strictures of state Blaine Amendments. This argument proved successful not just with the judge in Montana. As you read earlier, the Georgia Supreme Court unanimously rejected a challenge to a similar program using the same argument, and the U.S. Supreme Court clarified in Trinity Lutheran v. Comer that state Blaine Amendments cannot exclude churches from generally available public benefit programs. These three victories mean that the Montana Department of Revenue’s positions just became much harder to defend.

Regardless, the Department’s director has already told the press that he intends to appeal to the Montana Supreme Court, and we look forward to continuing to fight for the right of Big Sky parents to pick the best educational options for their children.

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